Thiess Services Pty Ltd v Department of Natural Resources and Mines
[2010] QLC 30
•24 February 2010
LAND COURT OF QUEENSLAND
CITATION: Thiess Services Pty Ltd v Department of Natural Resources and Mines [2010] QLC 30 PARTIES: Thiess Services Pty Ltd
(appellant)v. Chief Executive, Department of Natural Resources and Mines
(respondent)FILE NOS: VLA905-05 DIVISION: Land Court of Queensland PROCEEDING: Appeal against annual valuation under Valuation of Land Act 1944 DELIVERED ON: 24 February 2010 DELIVERED AT: Mareeba (orally) HEARD AT: Brisbane MEMBER: Mr PA Smith ORDERS: 1. The appeal is upheld.
2. The unimproved value of the subject land, as at 1 October 2004, fixed in the sum of $1,760,000.
CATCHWORDS: Valuation – unimproved value
Evidence- reliability of expert evidence – reliability of sales evidence
Improvements – the nature of improvements - are leases and contracts improvements under the Kent St Principle?
Worsenments – the nature of worsenments
Infrastructure credits and approvals – the effect of planning schemes on valuationsCourt procedure – opportunity for reply
APPEARANCES: Mr Bowie and Mrs McDonnell, solicitors, of Minter Ellison, for the appellant
Mr Quinn and Mr Fynes-Clinton of Counsel, instructed by the Crown Solicitor, for the respondent
Background
This matter comes before me by way of an appeal by Thiess Services Proprietary Limited, against its annual valuation. The valuation occurred on 1 October 2004. The Chief Executive contends for a valuation of $4 million, whilst the appellant, in its Notice of Appeal, contends for a valuation of $350,000.
The Nature of the Land
The land is made up of a number of lots; Lot 100, on Crown Plan M314, lot 3 on Registered Plan 214256, lots 101 and 102 on Registered Plan 839072, lots 103 and 104 on Registered Plan 839073, parish of Bundamba. The subject land is influenced by electricity and water pipeline easements: Easement A on RP214276, in favour of QEC, 3.916 hectares, and easements A and B on RP223460, in favour of Ipswich City Council, 1.2157 hectares, both over lot 104 RP839073; easement B in lot 3 on RP214256, 4,601 square metres. Easements C and D in lot 102, on RP839072, 9.572 hectares; easement E in lot 103 on RP839073, 9.071 hectares; and easement F in lot 101 on RP839072, 1.795 hectares, all on survey plan 152158, and in favour of Queensland Electricity Transmission Corporation Limited.
The total area of the subject land is 274.856 hectares. As I mentioned previously, the date of valuation is 1 October 2004, with an operative date of 30 June 2005. The land is situated approximately 10 kilometres south-east of the Ipswich CBD on the dual carriageway, bitumen sealed, Swanbank Road in the vicinity, within the locality of White Rock. The land is located within the Swanbank New Chum industrial area, also known as Swanbank New Chum Enterprise Park, and is adjacent to the Swanbank Power Station. Access is considered good, with Cunningham Highway access located about four kilometres west of the subject. It is noted that the Cunningham Highway access is a major four-lane freeway which is suitable for the movement of heavy transport vehicles.
The History of the Land
The land has indeed an interesting history. The most relevant factor is that, in all likelihood, well in excess of 100 years ago, a significant part of the subject land was the site of large-scale coalmining operations.
In the earlier days, according to Mr Morphett's evidence, coalmining operations were underground mineshafts and tunnels, with various entry points to the surface of the subject land. Many of these earlier mines, in particular, were not surveyed properly, if at all. It is therefore a major difficulty for the owner of the land in not knowing precisely where any particular underground mineshaft may be located. This is particularly relevant in any activity which involves the placing of heavy weights on the surface of the land.
Towards the latter part of the life of the coalmining operations, and more particularly, around or about the 1970s and 1980s, the mining focus changed from being underground operations to open cut coalmining. This mining has left a number of large open cut voids, as well as overburden scattered throughout the subject land.
By the time of the cessation of mining operations, approximately one third of the total site comprised excavated voids. Significant areas of the balance site were covered by deposits of overburden, which had been excavated to create the voids. The balance of the land remained more or less in its natural state.
In addition to the underground mining operations and the surface voids and large stockpiles of material, it is also pertinent to note that the subject land, comprises a large amount of what has been termed in the report by Mr Morphett, at page 10, at 4.3.2, as "burning material". This material is the spontaneous combustion of coal or other related material such as chitters, which catches fire both at the surface and subsurface.
I note that the depth of burning coal has been found at approximately 80 metres on the site, and is regularly found at depths of up to 30 metres. Tragically, the existence of the spontaneous combustion on the subject land, which is hazardous for the present use to which the land is put, and was put at the date of valuation, has resulted directly in the death of one worker, and also, the loss of some significant machinery.
Services
The land enjoys services provided to it of power, town water, telephone and postal services. The land is designated under the Ipswich City Council planning scheme, gazetted in April 2004, as regional business and industrial investigation area 3, about 70 per cent, and regional business buffer, about 30 per cent.
The Swanbank New Chum land use concept master plan, referred to in Mr Brannock's report, and the Swanbank precincts plan, also referred to in Mr Brannock's report, further depict the designation and current use of the land.
The land is currently used as a landfill site for waste disposal and recycling facility, with approval to receive 200,000 or more tonnes of waste per year. The disposal of putrescible and other municipal and regulated waste, manufactured soil conditioner, power generation and storage and treatment of other waste is occurring on both land designations on the site.
As at 1 October 2004, parts of the land had been remediated and improved, so as to be capable of receiving landfill. In this regard, I refer specifically to the statement of Clinton John Theil, which is found in Exhibit 3, at page 5.
As Mr Theil said, as at 1 October 2004, there was a capacity for landfilling of 3,320,836 cubic metres, and as at that date, the appellant was in the course of filling cell 4. Further, as at 1 October 2004, parts of lot 102, 103 and 104 on RP839073, were being put to the use of landfill and auxiliary operations. Parts of lot 103 and 104 on RP839073 were used for disposal of municipal and regulated waste, manufacture of soil conditioner and storage and treatment of regulated waste and electricity generation. Parts of lot 102 on RP839073 were used for disposal of construction and demolition waste and the storage of treated regulated waste, including the manufacture of soil conditioner and storage of biosolids in the soil. And further, none of the cells were constructed to their final level.
As regards lot 100, it is not the subject of any approvals obtained for the use of the balance land as landfill in any way at all. It was purchased in late 1999, and provides access to a body of water upstream of the site for comparison testing of the water released from the landfill site.
Range of Land Uses
In Exhibit 5, at points 5.1 to 5.43, Professor Brannock went through a range of uses to which he considered the land could be put. I will refer to these uses in brief detail.
Professor Brannock considered that the pre-mining scenario for the subject land was that if it had not been mined, it would be ideally suited for a large range of business, industrial and difficult to locate uses, due to its excellent situation.
As for the post-mining scenario, I note Mr Brannock's comment that, "It is good planning policy to protect the region's key extractive resources." Further, "Once the coal is extracted from the site, land has a very limited use. " Professor Brannock goes on to note that, "There are expensive and quite significant obligations on the user/landowner for rehabilitation and remediation of the land."
He further states that it his opinion that, "The range of uses of the land as allowed under Ipswich Planning Scheme, is limited to a waste disposal and recycling facility or recreation pursuits." Further, "During the process of filling the void, the land immediately surrounding the hole is also deemed to be noxious, contaminated with little or no prospect of council approval for any use other than ancillary structures and the operations of a waste disposal and recycling facility."
Professor Brannock goes on to describe the October 2004 scenario, which is consistent with what I have already outlined earlier in these reasons, and then moves to the post‑landfill scenario. The important aspect of his post‑landfill scenario is that long after the land ceases to be used as an active site for receiving waste material, there will be ongoing obligations on the landholder or user to fulfil both monitoring and rehabilitation activities on that land. In Professor Brannock's view, this limits the use to which the land can be put post-landfill to open-space parkland in the future.
Relevant legislative provisions
Pursuant to section 13 of the Valuation of Land Act, the respondent is required to determine the unimproved value of the land. Unimproved value is defined in section 3 of the VLA as follows:
"3 Meaning of unimproved value
(1) For the purposes of this Act—
unimproved value of land means—(a)in relation to unimproved land—the capital sum which the fee simple of the land might be expected to realise if offered for sale on such reasonable terms and conditions as a bona fide seller would require; and
(b)in relation to improved land—the capital sum which the fee simple of the land might be expected to realise if offered for sale on such reasonable terms and conditions as a bona fide seller would require, assuming that, at the time as at which the value was required be ascertained for the purposes of this Act, the improvements did not exist.
(2)However, the unimproved value shall in no case be less than the sum that would be obtained by deducting the value of improvements from the improved value at the time as at which the value is required to be ascertained for the purposes of this Act.
(2A)The assumption mentioned in subsection (1), definition unimproved value, paragraph (b) is limited to the notional removal of the improvements only as at the time of valuation.
(2B)For subsections (1) and (2), the unimproved value of land includes any increase in the value of the land that has happened in connection with—
(a)a local planning instrument; or
(b)a development approval or other approval or authority under an Act, other than a hotel licence, relating to the land or an improvement of the land.
(2C)Nothing in subsection (1) or (2) requires an assumption, in relation to improved land, that the improvements have never been made.
(3)In addition, the restrictions and limitations in any deed of grant or certificate of title in respect of any racecourse shall be disregarded in ascertaining the unimproved value of the land of the racecourse concerned.
(4)Notwithstanding anything contained in this section, in determining the unimproved value of any land it shall be assumed that—
(a)the land may be used, or may continue to be used, for any purpose for which it was being used, or for which it could be used, at the date to which the valuation relates; and
(b)such improvements may be continued or made on the land as may be required in order to enable the land to continue to be so used’
but nothing in this subsection prevents regard being had, in determining that value, to any other purpose for which the land may be used on the assumption that any improvements referred to in subsection (1) had not been made."
Presumption of correctness of valuation.
I now turn to section 33 of the VLA which states as follows:
"33 Status of valuation
Any and every valuation, or alteration of the valuation, of any land made, or purporting to be made, under this Act by the chief executive shall be deemed to be correct until proved otherwise upon objection or appeal or until altered or further altered."
This section was considered by the High Court in the case of Brisbane City Council v. Valuer-General for the State of Queensland,[1] where Justice Gibbs, as he then was, made the following observation at page 56:
"In my opinion once it is shown that in making the valuation the Valuer-General acted upon a wrong principle, or made a serious error of fact, the presumption created by s 13(7) is rebutted."
[1] [1977-1978] 140 CLR 41.
It should be noted that section 33 of the VLA is in essentially the same terms as it was then as section 13.7 of the Act.
Regarding the issue of presumption of correctness, this case is a little unusual in that the provisions of section 3 of the VLA were amended in 2008, with retrospective affect to 2002. Mr Bowie in his submissions of 12 September 2008, referred to this issue at paragraphs 5 to 8 of his submissions. Mr Bowie had this to say, relevantly:
"5. The presumption that the valuation is correct is overcome by the demonstrated errors of law and methodology applied in determining the value appealed against.
6. Further, as a direct consequence of the 2008 amendments to the Act, the appeal must be allowed. The valuation cannot have been carried out in accordance with the law against which a section 3(1)(b) valuation must now be made as the amendments have retrospective operation, directly affecting the principles and methodology to be adopted in making such valuation.
7. The Court must now determine the correct, or preferable, unimproved value of the Land having regard to the applicable legislative regime.
8. In the circumstances, each party bears an evidentiary onus for its contentions about such value."
In my mind, there is considerable force in Mr Bowie's submissions.
The Hearings
At the hearing of the matter, the appellant was represented by Mr Bowie and Ms MacDonald, both solicitors of Minter Ellison. The respondent was represented by Mr Quinn and Mr Fynes‑Clinton of counsel, instructed by the Crown Solicitor.
During the course of the hearing, the appellant called the following persons to give evidence: Mr Clinton John Theil, an environmental engineer; Mr Michael Edward Gilligan, quantity surveyor; Mr Leigh Elwin Ainsworth, who was the executive general manager of Thiess Services; Robert John Morphett, who is the principle of Golder Associates Proprietary Limited, engineering geologists; Professor John Robert Brannock, a town planner, and Rodney Lewis Brett, a registered valuer.
The respondent relied upon the evidence of departmental registered valuer, Daniel O'Connor, but did not otherwise call any experts in any of the other fields relied upon by the appellant. The respondent also called by way of subpoena for the attendance of Mr Stuart Alexander MacNaughton, solicitor, who appeared in response to that subpoena. Mr MacNaughton was the solicitor acting for Collex, which will become clearer as I explain the proceedings.
The Proceedings: A Tortured History
The Notice of Appeal in this matter was filed on 9 September 2005. A preliminary conference was conducted on 20th February 2006, which was not successful. The appeal was then joined with an appeal by a commercial competitor, Collex, who also appealed against their 1 October 2004 valuation over a putrescible waste collection site, also in the Ipswich area.
Substantial case management occurred throughout 2006 and 2007. Early in 2008, both the Thiess and Collex matters were referred to ADR processes before Member Scott. Other events were also occurring in 2008. In response to the Land Appeal Court's decision in P.T. Limited v. Chief Executive, Department of Natural Resources and Mines[2] (“Chermside LAC”), delivered on 17 October 2007, the Queensland Parliament enacted the Valuation of Land Amendment Act 2008, (“the Amendment Act”).
[2] [2007] QLAC 77.
In important elements, the Amendment Act has retrospective effect. The respective views as to the impact of this legislative amendment could not have been more stark as between the parties. This is shown very aptly by the written reply submissions of Mr Quinn and Mr Fynes-Clinton, dated 30 September 2008, where they had this to say at paragraphs 12, 14 and 15. Paragraph 12 is under the heading, Legislative Intent:
"12. It is difficult to imagine how some of the propositions could ever have any practical relevance. For example AS 28 appears to involve an attempt to suggest that the amendments should not be regarded as demonstrating an attempt to reverse the effect of the decision in the Chermside LAC case. But no reasoning is offered as to how the Court might legitimately ignore parliament's intention to reverse the operation of that decision."
Further under the heading, Notional Removal of Improvements the submissions continue:
"14. AS35 - 42 These submissions appear to reflect a desire on the part of the Appellant to cling to the Chermside LAC decision.
15. But the Chermside LAC case was decided upon the basis of a VOLA as it stood prior to the 2008 amendments. If one thing is clear it is that the parliament intended by the 2008 amendments to eliminate the effect of the Chermside LAC case. It therefore seems, with all respect to the Appellant, to be unprofitable to spend too much time on the Chermside LAC case except, perhaps, for the purposes of discovering what is not law in Queensland following the 2008 amendments."
It is fundamental in my view to the disposition of this appeal to keep in mind the extremities of the legal opinions that the parties proposed after the legislative amendment. It is difficult to imagine that the respective views as to the impact of the Chermside LAC decision or the operation of the Amendment Act could have been more starkly removed, one from the other.
As part of the ADR process, the Collex matter settled, but the current proceedings did not. It would be remiss of me not to make reference of the work undertaken by Member Scott, now retired from this Court, and his ADR expertise in reaching settlement of the Collex matter.
After settlement of Collex, the matter then proceeded not as a combined hearing as previously envisaged, but as a hearing only of the Thiess matter. I should stress that the settlement in the Collex matter has not in any manner been made known to me by any of the parties in this Appeal, nor have I been informed of that outcome by any member or staff person of the Land Court.
The hearing of this matter commenced on 12 May 2008. It was anticipated that this case would become a test case as to the legal impact of the Amending Act, however matters did not go according to plan. Firstly, delay was caused by illness to Mr Quinn early in the week of 19 May. This was compounded by Mr Bowie falling ill later that same week. Of course, no criticism whatsoever of delays caused by illness is made, but the resulting impact of that lost time is important.
The respondent closed its case late on day 14, which was 6th June 2008. Due to the time lost earlier in the hearing by illness, the dates set aside for submissions in July were abandoned. Again, without any criticism to any person, Mr Bowie had a longstanding commitment to leave the country for a number of weeks, and both parties agreed that the submissions should be delayed.
The timetabling of this matter then fell into the Land Appeal Court's hearing of the matter of Kent Street v. The Department of Natural Resources and Mines, (known as “Kent Street LAC” or “Pacific Fair LAC”). Many of the same lawyers for both parties were heavily involved in this matter and Kent Street LAC. Kent Street LAC subsequently became the test case as to the operation of a 2008 Amendment Act. The timetabling of the closing submissions in this case took that matter into account.
The hearing of the submissions in this matter, accordingly resumed on 21 October 2008, with an application by the respondent to reopen the evidence. After that was dealt with the legal representatives spoke to their respective written submissions. Oral submissions continued on 22 October 2008 and 9 and 10 December 2008. The case, however, did not end there.
Anticipating that the Land Appeal Court was soon to deliver its Kent Street decision, the parties sought, and were granted, a timetable for making submissions as to the impact of the Land Appeal Court - Kent Street decision. Land Appeal Court handed down its decision on 19 December 2008. The Chief Executive subsequently appealed that decision to the Court of Appeal.
Day 19 of this matter was subsequently held on 3 March 2009, when the parties gave their submissions as to the impact of the Kent Street Land Appeal Court decision. Save for time for the parties to provide the Court with an agreed chronology of certain events relating to the subject land, and the sold properties, the decision was then reserved.
The Kent Street appeal to the Court of Appeal was subsequently prosecuted. In parallel, I undertook substantial work on the reserved decision. My work had reached a critical point on 7 September 2009 when I directed that the following email be provided to the parties:
"Dear practitioners, Member Smith has reached key preliminary findings for determination in the above matter. Member also notes the Court of Appeal has now heard the Pacific Fair Appeal with the decision being reserved. Some elements of his decision are very likely to be impacted upon by the Court of Appeal decision, a fact already acknowledged by the parties. Member Smith's current inclination, in light of his preliminary findings, is to defer handing down his decision until such time as the Court of Appeal decision is known. He considers, that whilst in the short-term, the matter will be delayed, in the long-term, the parties may ultimately have a substantial saving of costs and effort by awaiting the Court of Appeal decision. Member Smith requires the parties attendance at 2.30 p.m. on Thursday 10 September 2009 in Hearing Room 6, Level 10, 259 Queen Street, Brisbane for a brief mention. Counsel's attendance is not required but that is, of course, a matter for the parties."
The mention proposed for 10 September 2009 did not proceed as the parties, on 8 September 2009, agreed to consent orders that the matter be adjourned until after the Court of Appeal decision in Kent Street was handed down, with a further review directions to be conducted at a convenient time thereafter. That would, of course, be dependent upon the coming Christmas holiday period.
Late in 2009, the Court of Appeal handed down its decision in Kent Street.[3] On 10 February 2010 the review and directions as per the consent orders of 8 September 2009, was conducted. A timetable was reached requiring the respondent to provide its submissions by 19th of February, the appellant, by 26th of February, and the respondent, any reply, by 4 March 2010, with the submissions to be no more than 10 pages in length.
[3] [2009] QCA339.
On the morning of the 15th of February, the appellants made an urgent request to the Court for the matter to be brought back on before me. The matter was subsequently listed for 2 p.m. on 15 February. The circumstances surrounding the urgent application to bring the matter back on, should be explained.
On 11 February 2010, the day after the mention of this matter, a Bill was introduced to the Queensland Parliament, titled The Valuation of Land and Other Legislation Amendment Bill 2010. The Bill is a significant Bill in that it amends the current Valuation of Land Act in many significant respects. In particular the Bill contains significant amendments to the current section 3 of the Valuation of Land Act, but in saying this, and drawing particular attention to section 3, I do not want it to appear that the other legislative amendments contained in the Bill, are not significant.
On 15 February, Mr Bowie, for the appellant, referred me, in particular to clause 105 of the Bill which relates to the respective displacement of particular provisions. Clause 105 of the Bill relevantly contained in 105.5(b):
"(5)(b) a proceeding, including an appeal from a proceeding mentioned in subsection (4), started but not decided before the commencement. "
Mr Bowie expressed the concern that if the Bill in its current form was enacted, and the Bill went through Parliament in a timeline, then currently envisaged as likely to occur as early as 25 February 2010, that the effect of the Bill, if enacted, would be that the decision in this matter, not having been handed down, because, quite obviously, submissions were still being received from the parties, the new provisions of the legislation would apply. If those circumstances eventuated, Mr Bowie felt that a great amount of the evidence currently before the Court would need to be reheard.
Due to the drastic nature that would follow to the parties in the event that the Bill was enacted on 25 February, or thereabouts, and taking specific account of the fact that this matter had indeed had a long chequered history, with the parties making substantial submissions from the very outset regarding the Chermside LAC decision, the Kent Street Land Appeal Court decision, and finally as contemplated submissions regarding the Court of Appeal Kent Street decision, I vacated my orders of 10 February 2010, and in lieu ordered that the matter be set down for hearing of oral submissions on 18th of February 2010.
Without being overly pedantic but, due to the serious nature of some events which transpired on 18 February 2010, I feel it incumbent upon me for reasons of ensuring that my reasoning in this matter is completely clear to the parties to deal in some brief way with the occurrences of 18 February 2010. I also need to stress that my view on the evidence in this matter had crystallised by September 2009, and that I also had a detailed reasoning of the law applicable to such evidence by September 2009, subject of course, to the reasoning adopted by the Court of Appeal in Kent Street.
Mr Fynes-Clinton appeared on behalf of the respondent at the submissions on 18th of February. One aspect of his submissions which troubled me greatly is to be found at pages 13 and 14 of the transcript.[4] I will let the transcript speak for itself, but the key points were that the respondents gave Mr Fynes-Clinton specific instructions that he had not set out in his written submission, and they were to the effect that the Court, by its actions on 15 February 2010, had caused the respondent prejudice, in that its preferred counsel could not be involved in the oral submissions.
[4] Day 21, which was 18th of February.
The respondents further put through Mr Fynes-Clinton, that the truncating of the timetable also led to additional prejudice for the Chief Executive, as the Chief Executive, due to Mr Quinn's absence, would not be able to avail itself of the full benefits of his detailed knowledge of this matter for the truncated reply, as opposed to the timing of a reply that was made as per the original orders of 10 February 2010.
In order to ensure that any prejudice, either real or apprehended by the respondent, could be adequately addressed, I gave leave to the respondent to file and serve additional submissions as to the impact of the Kent Street Land Appeal Court decision the following day, if the respondent felt it necessary. I gave Mr Bowie only a short number of hours to respond to any additional submissions that were made. Mr Fynes-Clinton indicated that the respondent had had the assistance and input of Mr Quinn in the making of its written submissions, and that there was no real prejudice with regard to those written submissions. The real prejudice and concern for the Chief Executive, related to the issue of a reply.
In order to meet this concern, I granted leave to the respondent to file and serve written submissions in reply by 4 p.m. on Monday 22 February 2010. The Chief Executive took advantage of this order. I also made available to the parties access to the Land Court's digital recording system, so that the parties could have instant access at the Court premises on the giving of an hour's notice to the Land Court staff of the proceedings as they had occurred on the 10th, 15th and 18th of February.[5]
[5] A typed transcript not being then available.
I should not leave this aspect without referring to a further quote from Mr Fynes-Clinton at page 15 of the transcript of 18 February. With respect to the prejudice which the respondent felt it suffered because of Mr Quinn's absence, Mr Fynes‑Clinton had this to say, amongst other things:
"Mr Quinn was specifically briefed alone and without junior counsel to deal with this issue on that basis. He was able to do so based on a timetable ordered by the Court on 10th of February. Because of other Court commitments he's been unable to do so, and I should say, that this is a matter of being frank with the Court, Mr Quinn certainly had some input into the written submissions that I've handed up today and it's not for a moment suggested otherwise."
At page 18 of the transcript, Mr Bowie had this to say in submissions, followed by Mr Fynes-Clinton:
"… The other thing, your Honour, that didn't come out of my learned friend's submission on the point, was whether Mr Quinn is actually in a courtroom somewhere else at this moment in time, or simply, as all of us are doing, preparing other matters, and perhaps that should be clarified, with respect."
Mr Fynes-Clinton:
"Well, certainly Mr Quinn is at the moment in his chambers as a result of - I understand, of a matter that he was engaged for today being adjourned at the last moment this morning. So in that sense, and I certainly wasn't seeking to withhold any of this, he could physically have been here, but he's been unable to prepare except by way of providing some assistance in conference as to the document before the Court, because until this morning, as I understand it, from Mr Quinn directly, he was actively engaged in preparing for another matter which adjourned at the last moment. Mr Quinn is physically in chambers today, and has been - and I should be frank with the Court about this, has been in that sense free since - I think about 10.30 this morning."
I then asked Mr Fynes-Clinton:
"So he could have heard all of the discourse today and could have heard all of the oral submissions that Mr Bowie's going to make today?",
to which Mr Fynes-Clinton replied:
"Literally that's true, yes, your Honour, that's so."
In my view, due to the fact that the respondent was represented at the hearing of submissions on 18 February 2010, by counsel who had been engaged throughout the Thiess hearing, and further, in light of the fact that Mr Quinn was not actively in Court at the time of the submissions being heard, and was provided with at least one hour's notice by the Court before the matter was called on for the hearing of submissions, and further, given my making available to the parties the electronic transcript of proceedings and the opportunity for the respondent to make a formal further submission as to the impact of the Kent Street Court of Appeal decision the following day, and further, written reply submissions by the following Monday, I consider that any perceived, actual or implied prejudice which the respondent may have suffered due to the events of 8 to 15 February 2010 has been well and truly met and rectified.
Of course, these events should not be viewed in a complete vacuum. I accept the assurances by Mr Fynes-Clinton that no‑one at the Bar table representing the respondent on 10 February 2010, was aware that the amending legislation was to be introduced into parliament the next day.
However, I am certainly yet to be convinced that the respondent was not aware of the imminent lodging of the amending Bill in parliament, and the anticipated passage of that legislation through parliament in a short period of time, with direct retrospective impact on all cases currently part‑heard or awaiting final determination before the Land Court, including, most particularly, for current purposes, the case at hand.
Whilst I certainly do not expect, nor want or propose, in the slightest regard, that any breaching of Cabinet confidentiality could have occurred, certainly, the respondent could have asked for the directions hearing on 10th of February, to be delayed by a couple of days. This would've allowed the respondent to have come to the Court and made the Court fully aware of the introduction of the amending bill.
Again, I only can act in accordance with the law as it currently stands before me, and I stress that the amending Bill is only a Bill, and my decision in this matter is made purely on the law as it exists as at today's date, being 24 February 2010.
I now turn to examine the various non-valuation witnesses in this appeal. The first witness to be called was Clinton John Theil, environmental engineer. Mr Theil was a highly impressive witness, who answered all questions in a careful, thoughtful and cooperative fashion. I find his evidence reliable. His evidence is not only in oral form, but also in the form of reports tendered to the Court. He was subject to cross‑examination.
The next witness called on behalf of the appellant was Michael Edward Gilligan, a quantity surveyor. Mr Gilligan was also an impressive witness, who I find to be honest and reliable. In particular, I was impressed that when errors, omissions and mistakes in his report or his answers were pointed out to him, he made no attempt to hide from those mistakes or indicate that he had misspoken, or otherwise attempt to misconstrue those mistakes. He readily accepted mistakes which he had considered had been properly made, honestly and frankly, and moved on with his evidence. He is to be commended for that approach.
The next witness was Leigh Elwin Ainsworth, who is the executive general manager of Thiess Services. In my view, Mr Ainsworth can best be described as a careful witness. In evaluating the credit of witnesses, it is always a difficult thing when witnesses take a particular amount of time in answering any question put before them. Of course, quite often, a witness taking time to answer a question is nothing more than a witness taking particular care to ensure that he or she has understood the question and is giving the full, correct, truthful answer to that question.
Other times, of course, a highly measured response and period of time in thought by a witness prior to answering a question may be indicative of an answer which is less than frank or indeed, contrived.
As far as Mr Ainsworth's evidence is concerned, I am of the view that in answering each question, and in particular, taking time and care in answering questions, Mr Ainsworth was carefully looking for the meaning behind various questions before commencing his answer. In this regard, it is also my view that Mr Ainsworth was proceeding in this way so as not to give evidence which would disadvantage the appellant, if at all possible.
This resulted in him, at times, not answering questions comfortably. However, even taking these factors into account, I found his evidence to be generally honest and reliable, albeit with a factor of not wanting to disadvantage his employer, if possible. His evidence is therefore somewhat tainted in general terms, but in an overall context, generally to be accepted.
I now turn to Robert John Morphett, an engineering geologist. The respondent's submissions of 30th of July 2008, page 28, at 3.2, referred to Mr Morphett's evidence as an "Open and non‑argumentative style." I agree. He gave comfortable, clear evidence. To put it quite simply, Mr Morphett knows his stuff. Essentially, he is the classic expert witness any Court would like to have appear before it. I accept his evidence.
I now turn to the evidence of Professor John Robert Brannock, town planner. The evidence of Professor Brannock is particularly important when considering the highest and best use of the property, as I have previously referred to in these reasons. Professor Brannock was of the view that the potential uses of the hypothetical unimproved subject land as at 1 October 2004, were limited to a waste disposal and recycling facility, or recreational pursuit.
Despite the somewhat extensive cross-examination of Mr Brannock, I found his evidence compelling, including that relating to the hypothetical unimproved uses to which the subject could be put as at 1 October 2004. As highly as I have regarded Mr Morphett's evidence in the preceding analysis, I have an even higher regard for the evidence provided by Professor Brannock. He conducted himself before this Court as the expert's expert.
Valuation evidence
The valuation evidence on behalf of the appellant was given by Mr Rodney Lewis Brett, a registered valuer. The respondent was particularly critical of Mr Brett's evidence in their summary contentions of 28 January 2009. The counsel for the respondent had this to say:
"The pillars of the Appellant’s case
2. The Appellant's case, for all the discourse into legal issues of asserted novelty and difficulty, rests on 2 simple propositions of combined fact and valuation opinion:-
(a) that the Collex “sale” has been reliably analysed by Mr Brett to correctly identify the unimproved value of the land the subject of that “sale”; and
(b) that the unimproved value of the subject land has been correctly derived by Mr Brett by an acceptable process in comparison with the Collex “sale”.
3. Both these propositions are, on the evidence, pillars of straw.
4. The Respondent's propositions that the asserted “sale” is not a sale at all, and that Mr Brett's analysis is demonstrably unreliable even if it were, appear in the initial and reply submissions of the Respondent. In short:-
(a)The asserted sale is made up of components extracted from a series of transactions from 1998 to 2004 involving four parties:-
(i) Ebenezer Mining Company Pty Ltd;
(ii) Zedemar Holdings Pty Ltd
(iii) Zedemar Investments Pty Ltd; and
(iv) Collex(b) The transactions, all of which were ultimately linked in some way were:-
(i) the landfill agreement;
(ii) the Collex agreement assignment agreement (not put before the court);
(iii) the Ebenezer mine asset sale and purchase agreement;
(iv) the Zedemar Investments to Collex land sale contract;(v) the assumption deed, to which all of the “players” were parties.
(c)Mr Brett's analysis is premised on the basis that the Zedemar Investments to Collex land sale contract, at a price of $250,000 is not, in itself, a sale which reflects the unimproved value of the Collex land, hence his need to “construct” a purported analysis to come up with the different figure;
(d) Mr Brett's derivation of the value of the “royalty” stream, as a component of land value, is demonstrably unreliable because:-
(i)it limits the payments on which it is based to payments over a period of 10 years, in circumstances where the evidence is that those payments will flow for a period of at least 50 years and possibly more;
(ii)it applies a discount rate of 18 per cent, representing a very high risk that the payments will not be received as anticipated, in circumstances where there are in fact no material risk factors given:-
(A)the ongoing growth in population in southeast Queensland;
(B)the natural and inevitable propensity of urbanised humans to produce putrescible waste;
(C)Mr Brett's own direct acknowledgment that while the rate of growth of human waste output may slow, the waste stream itself will continue to grow over time;
(D)Collex's position, as a subsidiary of the Veolia group, as a well-established and large-scale landfill operator with no question mark identifiable in the evidence about its long-term strength or stability;
(iii) he was confused as to the relevance of a sinking fund rate and the distinction between valuation of an asset and determination of the present value of future payments. The sinking fund approach was rejected in Albany v Commonwealth (1976) 12 ALR 201, 231 1.33 – 232 1.10;
iv) it transforms the cash payments to an assumed “after-tax” residue which:-
(A)is contrary to both authority and valuation principle in the context of determining the cash sale price equivalent at a sale date of a purchase price received by instalments over time;
(B)makes assumptions about the “after-tax” effect of payments received by Zedemar or paid by Collex without any investigation of the actual taxation position or arrangements of either of those entities, matters which might well reveal that the simplistic assumption made about tax payable by the payee or tax saved by the payor bear no relation to reality;
(e)Mr Brett's allocation of $500,000 as the value of planning approvals bears no relationship to the evidence which indicates that Collex spent more than $1 million obtaining those approvals, money which would not rationally have been expended unless it was expenditure added at least that amount to the value of the land;
(f)Mr Brett's failure to take into account the component of consideration flowing to the vendor by which it was released from the land rehabilitation obligations assumed by the purchaser in circumstances where Mr Brett admitted in evidence that:-
(i)without attempting to put a figure on them, they were “substantial” and “extensive”;
(ii) the possibility of being rid of rehabilitation obligations was a primary motivation for the vendor in entering into the transaction.
5. So far as the second pillar is concerned, nothing in Mr Brett's evidence makes any attempt to provide the Court with an explanation of the process of logic, deduction or reasoning by which he starts with the derived value for the Collex land and ends with a reasoned opinion on the value of the subject land.
6. The opinion of an expert witness, in itself, has no evidentiary weight. If Mr Brett's evidence is to have any use:-
“it was necessary for it to comply with the prime duty of experts in giving opinion evidence: to furnish the trier of fact with criteria enabling evaluation of the validity of the expert’s conclusions”
7. It has value only if, in accordance with the rules of expert evidence, it is supported by a reasoning process, being a process not within the ordinary knowledge of a non-expert, which the Court can understand, adopt and apply to the factual evidence in order to make its determination about the ultimate matter in issue; in this case, the unimproved value of the subject land.
8. An unreasoned opinion is a mere assertion as to the ultimate facts in issue which is arguably inadmissible, even having regard to s 7 of the Land Court Act 2000, and is certainly of no weight.
9. Mr Brett does not directly rely upon, apply or use any of the other evidence in the Appellant's case to reason from his Collex value to his value to the subject. He tells the court that he has “had regard” to that evidence, whatever that means in terms of a valuer's reasoning process.
10. The value which he purports to derived from the subject land is, on the evidence, nothing more than an unreasoned and untestable subjective assertion. Mr Brett's opinion of value for the subject cannot, as a matter of law, form the basis for a finding in the Appellant's favour."
Before continuing further in evaluating the evidence of Mr Brett, I now turn to the respondent's valuer, Daniel O'Connor. Just as the respondents were highly critical of the valuation evidence of Mr Brett, so, too, were the appellants highly critical of the valuation evidence of Mr O'Connor. This is borne out by the summary of the appellant's submissions of 12 September 2008.[6]
[6] I apologise for the length of the proceeding and this quote, however, these quotes form only a miniscule amount of the total amount of written submissions provided by the parties to the Court.
The total weight of the written submissions provided by the parties is indeed very extensive, even when the parties reduced their submissions down to 10 pages.
For instance, the final reply submissions by the respondent received on Monday of this week, also, just on the simple reply points dealt with therein, some 10 pages or so in length.
The complexity of this matter is certainly only understood when one has regard to the complex nature of the very detailed submissions made by the parties, which, again, in particular, flow because of the substantially different views, which the respective sides have taken to the manner in which valuation methodology is to apply in this case.
I quote from page 26 on, of the appellant's submissions from 12th of September, commencing at paragraph 198:
"198.The Appellant submits that the valuation appealed against was not made according to law.
199.The Respondent's errors of law and law and methodology in making the valuation include:
(a)Failed to value for the highest and best use;
(b)Failed to recognise that the highest and best use as at the valuation date is a fundamental matter for the valuation;
(c)Wrongly considered that it was premature to identify a highest and best use for the land while the planning authority continued investigations about the future use of the land;
(d)Used massed appraisal techniques for the valuation of land where site conditions vary from property to property because of mining worsements;
(e)Assumed that the mining voids (a worsement) were improvements;
(f)Failed to take into account the remediation of mining worsements;
(g)Assumed that, for the purpose of the valuation, improvements did not exist at the moment of valuation, but existed immediately thereafter;
(h)Misconstrued the relevant provisions of the Ipswich Planning Scheme as they controlled the existing and likely future use of the land; and
(i)Misanalysed the principal sale (the Twigg purchase) upon which the valuation was based.
200. These areas were readily identified as the valuation was carried out by Mr O'Connor and his admissions in respect of these matters are found in the exhibits and in his oral evidence.
201.In the circumstances the valuation must be set aside and the correct valuation determined by the Court on the basis of the whole of the evidence before it.
202. For his evidence in the appeal, Mr O'Connor failed to adjust his methodology to take account of the legislative changes. He did not secure the additional information he needed for a proper comparison of the Twigg property and the Land. He mis-analysed the Collex JV purchase. Each of his sales analyses has been undertaken on the wrong basis. Mr Brett must be preferred.
203.Mr O'Connor was at no time willing to nominate the highest and best use of the Land, preferring to argue for an approach which assumed that the Land could be developed for any one or more of those uses which might be permitted under the planning scheme designation.
204. As appears from the valuer's joint statement, he treated the exercise of identifying the highest and best use of the Land as premature. It is a fundamental methodological error not to identify the highest and best use of the Land as at the valuation date and to value the Land for that use.
205. He refused to make any allowance for worsements on the ground that none of the changes to the natural state of the land were impediments to its actual use, based on his unique understanding of the meaning of the word 'impediment'. For the Respondent's Answers to Interrogatories, Mr O'Connor admitted that he had used the word 'impediment' as meaning a feature which did not prevent the use of the land continuing (T697 L38-42).
206.He wrongly assumed that if land has been harmed under the authority of the State and a land-owner later undertook remediation work so as to be able to put his land to economic use, such work, if carried out prior to the valuation date, should be ignored.
207.Mr O'Connor admitted that he did not value the subject property having regard to its advantages and disadvantages, but rather ‘looked at the overall Swanbank/lNew Chum/Enterprise Park Area and… assessed valuations from a comparison with sale 2 ‘warts and all’ (T611-40 -47 and T612-1-3). He continually repeated his 'warts and all' reference and seemed incapable of visualising the state of the land to be valued in any other way (T493 L8).
208.At T493 L45 and following he said – ‘As on page 5 of my report, all encompassing with perceived disabilities’.
209.And again at T494 L1-10 – ‘If I were to …classify this land according to landfill, void and other land, there would be a supposition that I would have to do a complete exercise on reviewing the voids separate from everything else. What I have done, I have undertaken is to look at the overall ‘warts and all’ impression of the landscape and tied that in with my market evidence'.
210. Yet – ‘If the improvements at that point in time weren't in existence, what's this piece of land worth in its current state with warts and all, I suppose, is the way I would describe it’ (T492 L39-42). He admitted that ‘it’s this overall impression of the whole area that leads me to the valuation that I’ve arrived at’ (T492 L31-32).
211. Mr O'Connor conceded that individual properties in the Swanbank/New Chum area would be affected by past mining operations to varying degrees (T494 L31-32 and T632 L11), but had not obtained the information about those differences necessary to make appropriate adjustments on a property by property basis.
212. He admitted that – ‘in assessing mass appraisal unimproved values is that that sort of technical information or the requirement for that sort of detailed analysis isn’t available’. (T494 L38-41) However, that is not a justification for persisting with the same approach when the valuation is challenged. In these circumstances Mr O’Connor’s ‘warts and all’ methodology does not meet the requirements of the statute for the determination of land values. He cannot hide between his generalisation that other properties are worse than his primary sale (the Twigg transaction – his sale 2) without the information needed to make reasonable comparisons.
213.He wrongly assumed that the mining voids were improvements, setting himself the wrong test for his analysis. Yet while he considered that the mining voids are improvements, his assumption was that they exist for the purpose of his valuation (T490 L45-47). He admitted that his assumption that the voids, being an improvement, were in existence until the moment of valuation, ceased to exist for the moment of valuation, and then came back into existence later was fundamental for his valuation (T492 L42-46, T493 L1) (but consider this attempts to avoid the consequences of his submission at T550-551).
214. Similarly, while Mr O'Connor conceded that a landfill cell was an improvement, when asked to accept that for the purpose of a valuation exercise, these improvements do not exist – he could not (T669 L3-5).
215.For partly-filled cells, he proceeded on the basis that for the moment of valuation only, those cells and related improvements were assumed not to exist. He assumed that the use would continue (with the benefit of the existing contracts) immediately after the moment of valuation. His assessment in terms of business continuity was that there would be no delay in re-establishing the business – ‘My understanding of the legislative change, the recent legislative change, is that at a point in time the existence of business would remain as it is and then for assessing the unimproved value we would assume that the improvements did not exist for a moment' (T487 L34-37, T487 L41-47 and T698 L15-20).
216.But his valuation before and after the legislative amendment was the same, as he acknowledged in cross examination –
'In October 2004 you made, for the purpose of making that valuation, the assumption that the improvements came back into existence immediately after the valuation moment?--Yes.
And in making your report you did the same thing?--Unimproved value.
Assuming the improvements are in existence immediately after the moment of valuation?—Yes
And for your oral evidence before this Court, again the same, that assumption?—Yes’ (T676 L25-35) and see also T490 L42-48 and T491 L1-11
217.By making that assumption, Mr O’Connor necessarily treated the entrepreneurial value as part of the land value. That was not the state of the law prior to the Amendment Act, nor does the Act as amended have that effect.
218.For the reasons set out in this submission, that error alone is sufficient to render Mr O'Connor's opinions of no value to the Court.
219.Mr O'Connor conceded that the contracts for the landfill operation are not part of the land, but part of a business. (T653 L1 – 2). He agreed also that for a prospective purchaser seeking to acquire the land, the availability of such contracts was relevant as they were 'an important part of the business' (T653 L8-10).
220He initially told the Court that he had not put his mind to the task of considering whether the benefit of any existing contracts for the delivery of waste to the Swanbank landfill would be available to the purchaser (T487 L22-26; T486 L25-33). However, asked to consider the proposition that the contracts would not be available to the notional purchaser, Mr O'Connor expressed the view that they would, and rejected the contrary proposition as a false premise (T654 L35). Given every opportunity at T655 – T656, Mr O'Connor evaded the question. His error of both law and methodology is apparent (T660 L40-44).
221.Nonetheless, Mr O'Connor accepted, hypothetically, that an acquisition of the land without the business in place would leave a purchaser with the risk, cost and time associated with establishing the business, but he still sought to rely upon the Twigg sale.
222.Mr O'Connor was of the view that the investigation studies and landfill design works add value to the land (T662 L37-42). He treated them as part of the approval. However, if they were not available without being purchased or if they could be obtained at no cost, he acknowledged that for the former, a purchaser would have to buy the rights; and for the latter, would not expect to pay for them.
223Mr O'Connor admitted that for the purpose of making his valuation, he proceeded on the basis the Appellant was both the owner and a potential purchaser (T486 L27-29). The correct approach, consistent with authority, is that the identity of the landowner is irrelevant to a consideration of the unimproved value – but that the Appellant is a potential purchaser of the land (it necessarily being considered, for that purpose, as not owned by the Appellant).
224.For site improved land, Mr O'Connor accepted that site preparation works carried out prior to the valuation date should be taken into account as improvements (T544 L20-25). However, where the landowner carried out remediation works so as to put his land to economic use, he wrongly assumed that the cost of the remediation work carried out prior to the valuation date should be ignored.
225.The unreliability of Mr O'Connor's recollection of his various conversations (and he produced no contemporaneous notes to support his recollections) is apparent not only from his misunderstanding of Mr Hocking, but also his inability to maintain his original attribution of a statement to Mr Smythe (T634 L43 – T635 L7).
226.Mr O'Connor was all too ready to disagree with experts in other disciplines without the benefit of expert advice supporting his opinions.
227.Mr O'Connor conceded as a matter of principle that a purchaser would expect its return to be one that is acceptable for its business model – an important concession given Mr Ainsworth's evidence (T488 L45-47); yet he made assumptions unsupported by evidence other than his own inexpert opinion about the economics of landfill operations.
228.Mr O'Connor adopted an overall generalised approach to landfill economics, rather than properly considering the differences between individual operations – 'My understanding is that the development approvals that I've looked at for the Thiess and sale 2 are fairly uniform in that they are both landfill approvals in establishing the land would need to be monitored post-rehabilitation, post-filling or post-landfill anyway' [T 691 L 31- 34]
229.Thus, although he accepted that the degree of difference between the approval conditions of the Twigg landfill and for landfill operations on the Land must be considered for the assessment of their respective unimproved values – he sought no expert advice as to the significance of those differences, again preferring his own unqualified opinion.
230.His overall attitude to the challenge to his valuation can be shown by his approach, in the face of clear evidence to the proposition that for the Thiess site, a non-putrescible operation was not viable - 'I am not convinced of that.' (T520 L21)
231.Mr O'Connor admitted that he was, for the relevant valuation period, the valuer responsible for carrying out the valuation in the Swanbank/New Chum area and that he increased the previous valuations in the area by 5 to 10 times (the previous valuation being only 3 years earlier) (T484 L16-18).
232.Curiously, the Respondent relies on this consistency of valuation increase as giving the Court some comfort for the correctness of the valuation. The magnitude of the valuation increase it is not of itself sufficient evidence of error, but when considered in the context of the broad range of errors identified, and the fact that Mr O'Connor was responsible for the extraordinary increases in value, it may be taken as an indication that the valuation should be more akin to the previous valuation than to that appealed against.
233.Mr O'Connor admitted that he had little experience of industrial valuations and he was 'mainly a rural valuer' (T484 L45-46).
234.He admitted that he had not previously used a royalty-based methodology in relation to land fill operations (T485 L10-11). In fact, he had no experience at all of the methodology.
235.Mr O'Connor's complete lack of understanding of the information he was given by Mr Hocking is apparent (T563 L1-15 to T563 L22-27).
236Significant errors of law and valuation methodology for the issued valuation being established, the valuation must be set aside. The Respondent then bears an evidentiary onus for those matters for which he contends.
23In that regard, the Court can give no weight to Mr O'Connor's opinion; and he was the Respondent's only witness."
I do not want to be critical of either valuer. In many respects, absent the Chermside Land Appeal Court decision, the 2008 amendment, the Kent Street Land Appeal Court decision and the Kent Street Court of Appeal decision, this would still be a case in which most valuers would, in my view, struggle.
Coupled with the 2008 amendments, the Chermside and Kent Street decisions, their position becomes even more difficult. Put simply, this is a case where it is very easy to be highly critical of the evidence of both valuers. That said, I find myself, to a large part, accepting the criticisms that each side has made of the other valuer as detailed in the respective quotes from submissions above.
I find myself in the position, accordingly, where I am not able to confidently rely on the valuation evidence of either valuer. This is a similar position to what former President Trickett found himself in, in the case of ING Management v. The Department of Natural Resources Mines and Water,[7] where he rejected the bulk of the valuation evidence before him.[8]
[7] [2007] QLC 0019.
[8] At paragraphs 40 to 62.
Having accepted the bulk of the non-valuation evidence virtually in its entirety, but ruled out all of the valuation evidence, how then do I turn to value the subject land? In these circumstances, is it appropriate to have consideration to the actual site itself? In this regard, submissions by both parties are relevant. I turn in particular to the submissions made on behalf of the appellant on 12th September 2008.
The appellant submitted strongly[9] that it was the respondent's submission, supported only by Mr O'Connor, that the price paid by the appellant for the subject land, taken together with other costs incurred in the development of the landfill operation, supports the valuation.
[9] At paragraphs 238 to 241.
The appellant went on to complain that the mathematical calculations carried out by Mr O'Connor during examination‑in‑chief cannot be taken as constituting a sales analysis, and that the methodology put forward by the respondent, when dealing with the subject land, was actually unsustainable.
In the appellant's view, no weight can be given to the purchase transactions of the subject as neither valuer analysed those transactions, either for the total consideration paid, or the value of any improvements included in the sale. Neither valuer relied upon the purchase by the appellant in their joint statement, or in their transaction reports.
I find myself in agreement with this position, as well, which again makes determination of the appeal somewhat difficult. The sale of the subject land referred to, occurred quite a number of years prior to the date of valuation[10] and was for an amount of approximately $330,000. Certainly, circumstances have altered quite dramatically from the time in which the appellant purchased the land, up until the date of the valuation.
[10] Approximately 10 years.
Most importantly, the quantum that an operator of a waste recycling and collection area receives, has fallen significantly due to competition in the marketplace. I also, having received no expert valuation evidence, cannot rely upon the quantum of the sales figure as being a proper sale between a vendor and purchaser meeting the Spencer Test.
This is a shame, because had the sale been more contemporaneous, one may have considered it possible to consider a proper analysis of the purchase of the subject and then take into account added value, if any, that flows from the planning approvals, infrastructure credits, and the existence of the waste contracts, if appropriate.
As I find myself unable to deal specifically with the site sale and add on the other factors, and I do not accept the valuation evidence of either valuation expert, but I do accept the other evidence as put forward by the appellant, I now turn to do the best I can with arriving at a valuation of the property.
In doing so, I first turn to consider the nature of the land insofar as the question of improvements and worsenments, is concerned, both in a factual and legal context. Leaving aside the evidence of the appellant's valuer but taking into account the other evidence put forward by the appellant, I consider that the improvements to the appealed property consists of the following: Structures; internal roads; dam and drainage systems; spilled water management systems; leachate water management systems; fencing; internal services; cell linings; reshaping of voids; remediation to date; extinguished underground fires to date; extinguished above ground fires to date; collapse of mine shaft to date; and revegetation to date.
Adopting the same methodology, I accept that the worsenments of the subject property as at the valuation date are: voids; unextinguished fires; uncollapsed mineshafts; tailings; prior contamination; fill to date; new and ongoing contamination created by landfill operation; need to relocate trunk water main and regional power lines; risk and cost of remediation obligations as a result of mining operations; risk and cost of remediation obligations created by landfill approvals.
In a legal context, what is meant by reference to worsenment? Mr Bowie in his submissions of 12th September 2008 touched to some extent on this concept. He argued that the general principle is that land is valued in its natural state, that is in the environment in which it is situated at the valuation date, and that Queensland Courts have been consistent in recognising that where land has been worsened by the operation of man, such land must be valued in its worsened state.
Mr Bowie drew my attention to the case of Hawse v. The Valuer‑General,[11] where the Land Appeal Court held with respect to land being used as a quarry that:
"In the subject case, prior to its alienation, worsement in the form of quarrying operations occurred. The subject land, therefore, must be valued in such worsened state and condition. In general, the unimproved value for statutory purposes cannot be higher than the market value of the fee simple in its worsened condition at the relevant date.
Rainbird v. The Valuer-General LAC [1980-1981] 7 QLCR 106 at 109.
As a matter of law, we agree with the approach below that the subject land in the final determination must be valued in its unimproved quarried state and condition."[11] [1989] 12 QLCR 233 at 228.
Mr Bowie went on to explain that in his view, the starting point for the Court's consideration of whether the land is unimproved land or improved land must be its condition, as worsened by mining activities carried out under authority of various mining leases, and that those operations of man which improve the value of land are improvements. Those factors of man which reduce the value of the land are worsenments. Put this way, the submissions of Mr Bowie appear both simple and compelling.
Infrastructure Credits
I now turn to the rather vexed question of infrastructure credits. The question of infrastructure credits has been the subject of relatively recent consideration by the Land Court. In this regard, I refer to the decision of former Member Jones of the Court in GPT RE Limited v. Department of Natural Resources,[12] and in particular to paragraphs 111 to 114 of Mr Jones' decision, relating to infrastructure credits and section 31B of the BLA.
[12] [2009] QLC 78.
Mr Jones has given full and proper consideration, in my view, to the manner in which infrastructure credits should be treated. Quite specifically, infrastructure credits are a question of fact.
As a question of fact, the value, if any, to be applied to infrastructure credits will necessarily differ from case to case, depending upon the factual circumstances before the Court. For instance, in GPT, on the facts of that case, Mr Jones discounted the quantum of the infrastructure credits to 95 percent of their known value.
Unfortunately, in the case before me, the parties, again, are a considerable distance apart regarding infrastructure credits. The evidence reveals that the amount of $19,883 was paid to the Ipswich City Council in 1991, for what can loosely be described as infrastructure which relates, then, to infrastructure credits.
Mr O'Connor, in his evidence, which I am not having regard to, contends that the value of the infrastructure credits as at 1 October 2004 is some $1.77 million. Although I have not had regard to Mr O'Connor's evidence, it should be noted that in arriving at that figure, Mr O'Connor has relied, at least, in part, on the evidence of Professor Brannock. As previously indicated, I certainly accept Professor Brannock's evidence.
What, then, is to be made of the vast differences in quantum of infrastructure credits in this matter? I should point out, for completeness, that the appellant urges me not to make any allowance for infrastructure credits in this matter.
The matter, in my view, can be dealt with in a couple of ways, but given the nature of the evidence in this matter, none of those manners are overly compelling or determinative. To begin with, I am somewhat surprised that there was not direct evidence on behalf of the respondent in one form or another (given that it is in the respondent's interests to have the added value of infrastructure credits, if any, as at the valuation date, included in the amount contended for) that no such evidence was led by the respondent from the Ipswich City Council.
Certainly, the Ipswich City Council should be in a position to advise, at least, on the basis of either highest and best use as specified, or on the basis of existing use, what the Council's view would be with respect to the quantum of infrastructure credits. Unfortunately, I am left to work in a vacuum.
The infrastructure credits in this matter relate specifically to the provision of potable water to the subject land. I note and accept the evidence provided by the appellant through various expert and other witnesses, that the water on the subject land which comes from the Council's supply is used by the workforce at the subject site, but not for any of the commercial industrial purposes for which the site is put.
In short, the town water supply is not used for the dampening down of dust, putting out of fires or other works relating to the construction of cells, or the processing of putrescible and other waste.
In this regard, the Ipswich City Council has specifically allowed the appellant to use water from the voids which are contained on the subject land. I accept the evidence that the water quantity in the voids is of a sufficiently large amount, that this is not only the theoretical position, but is, in fact, the position adopted by the appellant as at 1 October 2004.
I also accept that, that being the case, and as pointed out by Professor Brannock, the Ipswich City Council did not require additional infrastructure payments to be made by the appellant during the various approval processes that were obtained late in the 20th century, for the purposes of establishing the landfill operations.
On the basis of those facts as they sit, and further, given my findings as to the highest and best use of the subject property as a waste receiving dump or a sporting field, as found by Professor Brannock, I am not prepared to accept that the infrastructure credits should have an amount of $1.77 million added to the value of the subject property in this instance.
I am further not satisfied that the quantum of the infrastructure credits should be anywhere near this amount, however, I am also satisfied, on the evidence of Professor Brannock, that the amount of $19,883 is also not sufficient in 2004 dollar terms, to cover the value that is added to the land by that payment to Council having been made.
I also accept Professor Brannock's evidence, that one cannot know, with certainty, what requirements a local authority may or may not require with respect to any future infrastructure charges, should those infrastructure charges be sought at the hypothetical valuation date, or, indeed, for another use for the land at that date. This is, of course, compounded, as I have stressed, by the lack of any specific evidence by the respondent from the Ipswich City Council regarding those infrastructure credits.
In my view, the amount of infrastructure credits is probably in the range of the low hundreds of thousands of dollars. Similar considerations apply with respect to the approvals, which have been obtained by the Council with respect to the current use of the land. I accept, as a principle of law, the approach adopted by Former Member Jones in the GPT case as referred to, that approvals may amount to a higher value being attributed to the land in light of the 2008 amendments.
Again, however, the quantum of that amount is not, in my view, in the multi millions, as potentially contended for by the respondent, but is more in the order of the sum of $500,000, as contended for by the appellant, and confirmed by the evidence of Professor Brannock.
Kent Street principles
I accept the propositions put forward as uncontroversial statements of the valuation law of Queensland, as propounded by the Land Appeal Court in Kent Street and the Court of Appeal, that the added value of leases are not to be added to the unimproved value of a property, pursuant to the provisions of the VLA.
I also accept, in this regard, the submissions of the appellant, that precisely the same principles apply as a matter of both commonsense and a matter of legal construction and interpretation, as regards the question of the added value of contracts, as does the question of the added value of leases.
Determining the value of the subject land.
I now turn to the primary task before me, that is, to determine a valuation for the subject land as at 1/10/2004. To begin with, and by way of absolute clarity, I state my view that the presumption of correctness has been rebutted by the appellant in this case.
However, I do not accept that the valuation should be in the mount of $350,000, as contended for in the appellant's notice of appeal. In this regard, I accept the evidence of Mr Ainsworth, specifically referred to by the respondent, that the appellant would only accept an amount of $500,000 for a sale of the subject land if the business had turned into a loss-making venture, and it was necessary for the appellant to dispose of a loss-making venture relatively quickly.
I also accept the submissions of the respondent, that that is certainly not the case at hand,[13] and that the appellant, by its own senior employee, views the unimproved value of the land as higher, in a commercial sense, than that contended for in these proceedings.
[13] That is, that as at the valuation date, the appellant’s operations on the subject land remained profitable.
I accept, of course, the difficulties that a lay-witness such as Mr Ainsworth experiences in giving a value to land, but I also accept the commercial realities, that he would have, perhaps, a better knowledge than anyone as to the profit‑making levels of the subject land, and the commercial viabilities that flow therefrom.
The unimproved nature of the land is therefore something more than $500,000. In a theoretical sense, that sum may have added to it the sum added with respect for approvals in an amount of around $500,000, plus an amount added to it of some hundreds of thousands of dollars with respect to infrastructure credits, plus, I should add, a separate amount of approximately $275,000, which is the agreed sum between the valuers with respect to the value of lot 100.[14]
[14] Even though I do not accept the evidence of the valuers, I find, on the balance of the evidence before me, particularly that of Mr Ainsworth, and other evidence relating to the characteristics of the land itself, that an amount somewhere in the order of $275,000 should be taken into account for lot 100.
As I have indicated earlier, I am not prepared to accept a valuation of this matter on a site basis, working from the value of the land as set by purchase in the 1990s, or even taking into account the higher sale value that Mr Ainsworth may seek for the land, as at the valuation date.
I find the evidence regarding infrastructure credits and approvals to be too fluid in the particular circumstances of this case to allow that to happen, and I find the purchase by the appellant to be too old and undefined and uncharacterised by valuation evidence to be relied upon.
However, that said, looking at those various costs and add‑ons in a general sense does give the Court some measure to adopt in applying an appropriate unimproved value for this site. It is a helpful check method.
Having taken into account all of the evidence before me, and in particular, the evidence I have specifically referred to, and the evidence that I have specifically rejected from the respective valuers, and noting, in particular, the unimproved value of the land at 2001, in the sum of $440,000, and noting the general features of valuation which may apply in a generic sense as regards infrastructure credits and approvals and base costs value of the unimproved land, and also accepting the evidence from Mr Brannock and other experts regarding the general planning scheme of the Ipswich City Council, and the general industrial growth factors which had occurred both on the Swanbank subject land and the surrounding Swanbank area, in the years leading up to the 2004 valuation, in my view, doing the best that I can in the circumstances, I consider that it would be appropriate to apply a factor of four to the original valuation from 2001, which sets the value of the subject land, as at 1 October 2004, in the sum of $1,760,000.
Accordingly, in this matter, I order that the appeal be upheld, and that the unimproved value of the subject land, as at 1 October 2004, be fixed in the sum of $1,760,000.
Order
1. The appeal is upheld.
2. The unimproved value of the subject land, as at 1 October 2004, fixed in the sum of $1,760,000.
PA SMITH
MEMBER OF THE LAND COURT
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